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U.S. Department of State

Diplomacy in Action

FY 2007 U.S. Assistance to Eurasia


Bureau of European and Eurasian Affairs
FY 2007 U.S. Government Assistance to and Cooperative Activities with Eurasia
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Country Overview

U.S. FOREIGN POLICY AND FOREIGN ASSISTANCE OBJECTIVES & PRIORITIES

The fundamental strategic objective of the U.S. Government (USG) is a stable, secure, democratic, and prosperous Kazakhstan that is able to act in accordance with its sovereign interests on the international stage. The USG assists Kazakhstan to embrace free market competition and rule of law, efficiently develop its energy resources in a way that contributes to U.S. energy security, and enhance its role as a regional leader. The USG seeks to advance democratic reforms that will improve opportunities for Kazakhstanians to participate openly and effectively in civic life, and economic reforms that will attract and sustain foreign investment.

The U.S. also works to advance its common security interests with Kazakhstan by bolstering the sovereignty and independence of Central Asian states; fighting terrorism and the proliferation of weapons of mass destruction; and stemming narcotics trafficking. The United States and Kazakhstan have a common interest in developing Central Asia’s very significant energy resources, which form the basis for the region’s long-term economic growth and prosperity. A final key assistance priority is to promote Kazakhstan’s stability and prosperity through improving the quality, equity, and efficiency of the health care system and improving health outcomes.

OPERATING ENVIRONMENT


Kazakhstan is a key strategic partner in Central Asia and an important ally in the War on Terror. It has cooperated with the United States to confront the terrorist threat both in the region and further a field, including in Iraq, where the deployment of Kazakhstan military engineers since 2003 has helped to restore stability. Since President Nazarbayev’s 1991 decision to give up the nuclear arsenal Kazakhstan inherited from the USSR, Kazakhstan and the United States have prevented the proliferation of weapons of mass destruction (WMD) by securing nuclear, chemical, and biological weapons and facilities. As its oil production and economy grow, Kazakhstan is becoming increasingly influential in the region and on the world stage.

Kazakhstan continued to experience strong economic performance in FY 2007. The growth in the gross domestic product (GDP) for Kazakhstan in the first half of the year was at 10.2%, although the impact of global economic instability was expected to affect second-half performance. While the GOK readily articulated a strategic vision of democracy founded on strong central leadership bolstered by laudatory levels of public support, it remained resistant to certain community-level civic activities and to fully competitive political processes.

In May 2007 significant amendments were adopted to Kazakhstan’s Constitution. While the amendments were touted as aiming to strengthen parliament, they also removed term limits on President Nazarbayev. August 2007 snap parliamentary elections proceeded peacefully, but did not meet OSCE standards. In addition, the elections resulted in a one-party parliament, with all parliamentarians drawn from the Nur Otan Party, which supports President Nazarbayev, who has been president since 1990. However, Kazakhstan continued to press its candidacy to become the Chairman-In-Office for the Organization of Security and Cooperation (OSCE) in 2009, an aspiration that could ultimately serve to facilitate positive movement on political and democratic reforms.

FY 2007 Country Program Performance

PEACE AND SECURITY

Programs to Counter WMD Proliferation and WMD Terrorism - U.S. objectives in this area are to improve basic safety and regulatory requirements for new nuclear power plants in Kazakhstan and complete the safe and irreversible shutdown of the BN-350 reactor at Aktau. Other objectives included arranging for the long-term secure storage of the reactor’s spent fuel and engaging Kazakhstanian personnel with WMD or WMD-applicable expertise in long-term, non-military civilian work to prevent the diversion of their expertise to states of concern or terrorists.

To help prevent the proliferation of WMD expertise, the USG launched science and technology entrepreneur programs in June 2007 to improve scientists’ entrepreneurial skills. The USG and Kazakhstan’s National Center for Scientific and Technical Information shared costs for training sessions in three cities for over 350 participants. Moreover, four awards of $10,000 facilitated business-science partnerships and improved Kazakhstan’s science and technology capacity. USG assistance also supported Regional Experimental Support Centers, which are student-accessible, shared equipment centers. In FY 2007 the centers trained eight grantees in strategic and financial planning, development, and English. These centers also employed former weapons scientists in their research and analytical activities. For the past decade, two of the three centers have functioned independently without external support. In FY 2007 these centers also supported research aimed at improving infectious disease surveillance using new Geographic Information Systems (GIS) technology.

The USG helped the GOK to draft basic safety and regulatory requirements for new nuclear power plants that are consistent with international standards. Following a GOK review and comment period, the Kazakhstanian Atomic Energy Committee will adopt and issue final safety and regulatory requirements for new nuclear plants in early FY 2008.

In FY 2007 the USG continued to assist in the irreversible shutdown and safe storage of spent fuel from the BN-350 reactor at Aktau. Safe and secure storage of this reactor’s spent fuel is an important U.S. non-proliferation objective because the spent fuel contains a significant amount of weapons-grade plutonium. The USG removed sodium from the BN-350’s primary and secondary circuits and installed a cesium trap, based on U.S. technology, to reduce cesium levels. Removing the cesium reduced the amount of weapons-grade material and thus the threat of proliferation. The reactor no longer poses nuclear safety and environmental risks. Similarly, U.S. installation of a functioning cesium trap reduced cesium levels in the BN-350 reactor’s primary sodium material, and enhanced the reactor’s fire protection system to support cesium trap operation. The USG advised the GOK on the design, construction plan, and necessary equipment for a planned Geo-cement Stone facility, which will provide a stable and secure disposal site for extracted sodium reaction products.

The USG supported a variety of training activities and seminars, and also donated equipment designed to help Kazakhstan strengthen all elements of its export control system. The USG presented three 42-foot fast-response boats worth nearly $2 million to the Maritime Division of Kazakhstan’s Border Service. The boats increased the Maritime Brigade’s ability to intercept small high-speed vessels, and GOK officials in Bautino reported reliable performance over the year. In one instance, the boats intercepted a small Russian vessel suspected of poaching sturgeon in the Caspian.

In July 2007 sixteen Kazakh customs and border guard officials participated in the U.S. Customs and Border Protection’s International Border Interdiction Program in McAllen, Texas. The USG and U.S. National Nuclear Security Administration conducted nuclear and dual-use commodity identification workshops, a seminar on end-use/end-user analysis for export licenses, and a workshop on export controls and internal compliance for nuclear industries. The USG hosted several anti-terrorism courses in the United States and Kazakhstan, covering such topics as explosive incident countermeasures, terrorist crime scene investigation, and aligning U.S. and Kazakh counter-terrorism strategies. In November 2007 four engineering site surveys were conducted at border crossings in western Kazakhstan, bringing the total to 21 sites scheduled for equipment upgrades under this program.

Law Enforcement and Counter-Narcotics Programs - The USG’s overall objectives in this area were to assist the GOK to establish and sustain effective, professional and accountable law enforcement services, and to improve the GOK’s capacity to prevent, interrupt, capture, and eliminate illegal drug production, movement, or trafficking activities. In the area of financial crimes, the goal of USG assistance was to help the GOK introduce basic anti-money laundering legislation. The U.S. also worked to establish an effective, professional, and accountable Financial Intelligence Unit (FIU), and it sought to improve law enforcement official’s ability to detect and investigate financial crimes as well as to prevent, detect, investigate, and capture illegal assets received from any illegal activity or used for financing terrorism.

Kazakhstan continues to struggle to control opiates moving Northward from Afghanistan across Kazakhstan and on to Russia and Western Europe. According to the UN Office of Drug Control (UNODC), approximately 120 tons of Afghan heroin were smuggled via the Northern route in 2006. UNODC predicted the amount would grow. The USG and the GOK agreed on the need to focus not only on opiates being trafficked via the northern route, but also on the chemical precursors being shipped to Afghanistan. The USG is providing training for Kazakhstanian counter-narcotics officers to identify precursors.

Effective operation of the Committee for Combating Narcotics of the Ministry of Internal Affairs (MVD) is critical to the success of Kazakhstan's narcotics interdiction effort. Through UNODOC, the USG provided internal Kazakhstanian checkpoints with equipment, as well as built one structure for the Ulken post. For its part, the GOK provided the infrastructure, staff, and canine stock. The USG funded communication equipment to give six checkpoints real time transmission of information to augment their narcotics interdiction capabilities. On April 25 MVD officers received training on the use of defensive tactics. Working with UNODC, the USG conducted an assessment to determine the training and equipment needs of the internal narcotics checkpoints.

In addition, the USG supported seven selected checkpoints on Kazakhstan’s border with Russia, the Kyrgyz Republic, Uzbekistan and Turkmenistan. USG grants to the International Organization for Migration provided low-tech, specialized search and inspection equipment, delivered 10 vehicles to various checkpoints, and established one regional training center in Saryagash, on the border with Uzbekistan. Eleven participants received training in border inspection and 33 border guards received training on fraudulent document identification at the training center. As a result of the training the government increased the number of fraudulent documents it identified by 35%.

The USG established a relationship between the Military Institute and the U.S. Border Patrol Academy through visits of the Head of the Military Institute to the United States and the Chief of the U.S. Border Patrol Academy to Kazakhstan. Two graduates of the Kazakh Military Institute will attend the U.S. Border Patrol Academy for four months of basic training. The Kazakh Border Guard Services indicated its interest in establishing a modern, civilian border patrol that utilizes U.S. standards and best practices in border security. To facilitate this goal, the Military Institute of the Committee for National Security and the U.S. Border Patrol Academy agreed to train trainers, and a cadet exchange program.

The USG helped the GOK to draft its Law on Combating Money Laundering and Financing Terrorism, which was introduced to the parliament in 2005. Property and assets legalization processes postponed parliament’s adoption of the anti-money laundering law and the establishment of the FIU. Following adoption of the anti-money laundering law in August 2007, the GOK renewed its anti-money laundering efforts and planned to establish an FIU at the beginning of 2008. During FY 2007 U.S. law enforcement experts conducted four seminars for 100 police officers on the detection and investigation of financial crimes.

Trafficking-in-Persons and Migrant Smuggling - The U.S. objectives in the trafficking-in-persons (TIP) area included improving GOK capacity to protect victims of trafficking, strengthening the Kazakh criminal justice system’s ability to investigate and successfully prosecute traffickers, and increasing the public’s awareness of the dangers of TIP and migrant smuggling.

The USG sponsored two seminars for local governments, NGOs, and international organizations that operate or sustain shelters, provide assistance to TIP victims, and create public-private partnerships between business and civic organizations. Five GOK representatives were designated to travel abroad to learn how successful shelters are established, operated and sustained. A USG-funded shelter in Almaty, assisted 93 victims who were trafficked either for labor or sexual exploitation.

To strengthen the criminal justice system’s ability to investigate and successfully prosecute traffickers, the USG worked with Kazakhstan’s legal institutions to advocate for continued legal reform and proper enforcement of existing laws. The USG trained 53 police officers, border guards, prosecutors, and judges at a four-day seminar in January 2007. In April 2007 sixty representatives of law enforcement agencies, NGOs, and academic institutions participated in a two-day legislation review conference. In September 2007 representatives of the Turkish and Kazakh Governments met to enable the return of victims of trafficking. The meeting resulted in improved cooperation and communication between the different working levels of the two governments. The USG and MVD created the Karaganda Anti-TIP Center, a pilot for future GOK efforts. The USG repaired two classrooms, two offices, purchased furniture and equipment for the Center, and furnished and equipped nine apartments in the dormitory. The GOK funded repairs to the dormitory building and paid for travel expenses of all participants. The dormitory can accommodate 30 officers. In FY 2007 the USG funded training courses at the Karaganda center for 17 MVD criminal police officers and 60 migration police officers.

As a result of U.S. training and other assistance, successful prosecutions of TIP traffickers and complicit officials increased from 1 in FY 2006 to 17 in FY 2007. U.S. training for prosecutors and judges spurred this more vigorous prosecution.

To increase the public’s awareness of the dangers of TIP and migrant smuggling, the USG sponsored outreach campaigns that promoted community-based anti-TIP strategies. The USG and the Ministry of Information developed a public advocacy campaign to improve protection for victims that included a media plan to include TIP issues in government public service announcements. Media outlets agreed to broadcast these messages without charge. Other outreach activities included awareness seminars for police, investigators, prosecutors and judges in various cities throughout Kazakhstan. The USG also provided grants to local NGOs for the production of TIP-themed brochures, advertisements, cartoons, and movies. The USG produced new materials which provided strategies to avoid becoming a victim of trafficking and continued support for a country-wide NGO support network that ran 13 hotlines that averaged more than 100 total calls per month and provided a wide range of anti-trafficking activities, such as youth training, shelter support, roundtables, and summer camps. The USG also collaborated with local authorities in one region to conduct an anti-trafficking workshop for religious leaders. The USG-produced educational movie, “A Long Way Home,” recounted the tragic stories of three trafficking victims. The movie was shown in youth summer camps and in other locations to educate and inform potential victims about the dangers of trafficking. General TIP knowledge assessments administered to participating youths before and after the training event showed a significant improvement in basic knowledge of trafficking issues.

Stabilization Operations - The objectives of U.S. assistance in this area included improving communications between the U.S. and Kazakh military, improving the professionalism of Kazakhstan’s military, and upgrading non-lethal equipment of the military to improve its disaster response capacity. The GOK continued to support the U.S.-led coalition operations in Iraq, with the seventh rotation of Kazakh explosive ordinance disposal specialists serving in Iraq at the end of 2007. Kazakhstan also continued to provide no cost over flights and divert landings for Operation Enduring Freedom and Operation Iraqi Freedom.

Fifty-two Kazakh military personnel attended various professional military training courses in the United States in FY 2007. Graduates of USG programs are serving in positions of prominence throughout the Ministry of Defense, particularly in the Airmobile Forces and in Kazakhstan's Peacekeeping Battalion. In FY 2007 the USG purchased English-language labs and instructional material for Kazakhstan’s new Defense Institute of Foreign Languages. The USG provided training and spare parts for 27 “humvee” military all-purpose vehicles that were delivered to the KAZBAT Peacekeeping Battalion in FY 2005, and for a UH-II helicopter program that aims to help Kazakhstan develop the ability to transport its forces by helicopter in the Caspian region.

Also in FY 2007 the USG hosted several anti-terrorism courses at the International Law Enforcement Academy in Hungary and in Kazakhstan. The courses covered such topics as undersea explosive incidents countermeasures, critical incident management, and a police chief’s role in counter-terrorism.

The undersea explosive countermeasures course pressed the GOK to qualify a full team of divers before the course began in July, allowing it to field three teams of five for the three-week course in Atyrau. Following the course, two full kits with explosive countermeasures equipment were presented to the government to improve its ability to prevent, detect and respond to possible explosive incidents in the Caspian Sea. In addition, the USG funded the Critical Incident Management Course, which included earthquake response training. Twenty-four participants from the Ministries of Interior and Emergency Situations attended.

GOVERNING JUSTLY AND DEMOCRATICALLY

In the current environment, USG democracy programs focused on laying long-term foundations by developing demand for democratic institutions, increasing the sources of news and opinion, and ensuring vigilant protection of human rights.

Rule of Law and Human Rights - The objectives of USG activities in FY 2007 included building the skills of human rights advocates and organizations to monitor and report on human rights in Kazakhstan and increasing the independence and transparency of the judiciary.

During FY 2007 the USG continued to support Kazakhstan’s judicial modernization efforts, training more than 220 justice sector personnel and providing materials and resources to courts nationwide. To further increase judicial transparency and accountability, the USG helped the judges’ association prepare a plan to revise the judicial code of ethics as well as a draft revised code. At year end, the judges' association had not yet adopted this code of ethics.

The USG also expanded a judicial mentoring program that provided young judges with much-needed support, as more than half of Kazakhstan’s judges have less than four years of experience. USG programs helped educate judges on the new jury trial procedure through an innovative one-hour film. In addition, the USG completed a pilot project to install video recording equipment in courts. This equipment allows for the production of verbatim court transcripts, which are important for documenting court proceedings and preparing for appeals. Over 93% of all court personnel who used the equiment were in favor of a country-wide expansion of this technology. The use of the equipment also reduced the number of appeals; decisions in recorded cases were 2.5 times less likely to be appealed. While prosecutors reduced the number of decisions they appealed, there was also a reduction in appeals by defense lawyers and defendants, because they were more likely to believe the trial had been fair.

A USG-supported local-level advocacy program helped organize campaigns that significantly improved citizen access to judicial proceedings in the city of Almaty. The program posted information explaining appeals procedures and guaranteed access to court for citizens even without a summons for a trial or a special pass. In addition, the program improved responsiveness by succesfully advocating for a special citizens’ reception desk in several Almaty courts. The USG also supported free legal consultations, training in human rights, and an assistance program for refugees.

As a result of these activities, local human rights organizations engaged with the GOK on a range of human rights policy issues. For the first time, local NGOs regularly participated in official sessions of governmental human rights commissions. Three public advocacy campaigns resulted in legislative and procedural changes. NGOs were also consulted by the Ministry of Justice as legislation was drafted to comply with the International Covenant on Civil and Political Rights (ICCPR), including laws on access to justice, freedom of assembly, and combating torture. The GOK adopted additional measures under the ICCPR to protect human rights. Following a year-long advocacy campaign by USG-trained NGOs, the GOK adopted the First Optional Protocol to the ICCPR, declarations under Articles 21 and 22 of the Convention Against Torture, and the Optional Protocol to the Convention against Torture. Once ratified by parliament, these international commitments will require the establishment of a system of regular monitoring visits to closed facilities by independent international and national bodies. USG-supported local partners also submitted draft laws on access to information and freedom of assembly to the parliament for discussion; these laws will be formally considered in 2008.

Political Competition and Consensus-Building - The objective of this activity was to promote democratic political processes. The USG supported domestic election monitoring for the August 2007 parliamentary elections. Through an initiative jointly funded by the British Government, the USG funded a well-established domestic monitoring coalition to train and field 1,900 short-term observers and 200 mobile observers for the parliamentary elections. Following the vote, the group published recommendations for improving future elections. The domestic monitoring group released an interim report as well as a preliminary statement on the election process. The organization also coordinated post-election activities, including posting of election protocols on its website. As a result of these activities, over 2,000 individuals engaged in nonpartisan activities.

Civil Society - The U.S. objectives in civil society development were to assist local NGOs to strengthen communities and improve their civic and economic well-being, improve NGO legislation, and increasing the capacity of local civil society organizations to advocate and promote democratic reform.

In May 2007 during the constitutional amendment process, the USG provided the GOK with extensive technical analyses of an existing constitutional provision that prohibited state financing for public associations. This provision significantly limited NGO growth in a number of sectors. In addition to this constitutional provision, the USG also provided commentary on other legislation that would support increased civil society development, such as provisions of the tax code to support corporate philanthropy and a draft law on patronage and sponsorship. Through consultations and the development of a referral system to qualified lawyers, the USG also helped local organizations comply with GOK regulations. As a result of these activities, constitutional amendments were adopted that did not include the previous provisions that limited the growth of the NGO sector. USG support resulted in improved legislation and regulations governing the NGO sector.

The USG provided development assistance to women’s rights organizations and individual advocates in receptive areas of Kazakhstan, including the country’s International Bureau for Human Rights. In FY 2007 the USG supported press spokesperson responsibility training for eighty prosecutors, helped publish the Alternative Report to the UN Committee on the Elimination of Racial Discrimination, and established two telephone hotlines that provided 1,400 victims of domestic violence and their families with legal advice and psychological counseling.

As a follow-up to a FY 2005 program, the USG funded an American expert on digital citizenship to conduct workshops and lectures with librarians, journalists, and government officials. The program focused on the status of e-government, or electronic transparency in Kazakhstan, the expanding digital divide, and the lack of awareness among civil servants of the availability and functioning of e-government services. The speaker emphasized the potential role of libraries in Kazakhstan in overcoming the digital divide among low-income citizens.

The USG also funded a grant designed to improve awareness of environmental issues. Grantees obtained and publicized accurate information about environmental hazards, carried out monitoring, promoted civic activism, provided legal counsel, helped individuals and community organizations take their cases to court, and produced an in-depth publication about these issues.

Media Freedom and Freedom of Information - In this area of assistance, the U.S. worked to increase public access to objective news and information, improve media legislation and strengthen the media’s capacity to comply with existing laws.

In March 2007, the USG established a satellite broadcasting feed that covers all of Central Asia. The broadcast includes locally-produced programming, such as documentaries and weekly magazine programs in both the Kazakh and Russian languages. The programs were rebroadcast by nine partner television stations, but were also accessible to anyone with an appopriate satellite dish, a potential audience of over two million. In FY 2007 the USG helped an independent newspaper website to expand, as well as establish an Internet radio site with daily broadcasts. In order to improve the content of these programs, the USG funded residencies, technical training programs, and intensive consultations for local journalists. As a result of these activities, there was increased debate and discussion among Kazakhstan’s citizens on public policy issues. For example, with USG support, a nationwide broadcaster produced the first ever series of Kazakh-language televised political party debates before the parliamentary elections, providing a broader range of citizens with access to information in the local language.

To promote a more supportive environment for the operation of commercial media, the USG conducted a number of informational events including a session on the draft media law, and seminars covering legal education of journalists and potential media legislation reforms. The seminars focused primarily on efforts to define the state’s role in engagement with the media, including de-criminalization of libel and de-monopolization of the media industry. Despite promising and unprecedented engagement between the government and the media, the enacted media law did not address a number of the most significant concerns.

INVESTING IN PEOPLE

HIV/AIDS - The objectives of these programs were to improve HIV-related services, increase awareness among high-risk groups and improve blood safety and sentinel surveillance. During FY 2007 the USG implemented a number of programs to improve the GOK’s capacity to provide better HIV-related services, including emergency assistance in response to a pediatric HIV outbreak in Shymkent. In this case, the USG assisted local local health officials to investigate the event and helped draft the outbreak investigation report and findings.

To improve blood safety, the USG also provided training on the use of international proficiency tests and dried blood spots, which helped improve HIV detection showing 82% to 100% correct results. The USG also financed a blood-safety study in Pavlodar that identified deficiencies in the detection of hepatitis C and syphilis and recommended new blood screening quality control measures. The USG and World Bank expanded national HIV sentinel surveillance in Kazakhstan to include prison populations, and organized a conference to disseminate study results. A key finding was that HIV prevalence increased among prisoners. As a result of U.S. capacity building efforts for the Ministry of Health, the GOK planned to include funding for HIV sentinel surveillance in its 2008 budget.

To increase awareness about HIV/AIDS among high risk groups, the USG funded training and outreach events that disseminated information on HIV/AIDS and sexually-transmitted infections to over 19,000 young people. In addition, the USG trained more than 50 trainers and 741 peer educators to work with at-risk youth and prepared 100 outreach workers to educate sex workers about HIV prevention. The USG sponsored a series of events at Almaty universities and other locations to mark World AIDS Day. Workshops and conferences were held to discuss the HIV/AIDS situation in Kazakhstan and to address strategies for overcoming stigma and discrimination. In addition, the USG conducted 24 prevention and awareness training sessions for sex workers in accessible and neutral locations.

As a result of USG efforts, HIV prevention was integrated into official training on effective perinatal care standards in 53 maternity and other health care facilities. Training also covers universal precautions to prevent infection and new interventions to reduce post-partum hemorrhage and the subsequent need for blood products. In addition, as a result of U.S. capacity building efforts for the Ministry of Health, the GOK planned to include funding for HIV sentinel surveillance in its 2008 budget.

The USG also trained five epidemiologists and funded program graduates to investigate six outbreaks of infectious diseases: pediatric HIV in Shymkent, Hepatitis A in Uralsk, suspected diphetheria in Ust Kaman, two large food-borne outbreaks, and an outbreak of Congo-Crimean hemorrhagic fever.

Tuberculosis - The objective of these programs was to reduce the number of deaths caused by tuberculosis (TB). The USG helped the Ministry of Health (MOH) develop reliable TB referral mechanisms between the civilian outpatient and penitentiary systems. In FY 2007 the USG financed a multi-drug resistant TB control pilot program in Almaty, which the MOH subsequently adopted for use at the national level. Finally, the USG assisted the National TB Center to develop a five-year TB control strategy. As a result of USG assistance, the GOK included specific regulations on collaboration between civilian and prison sectors in the national TB control guidelines for FY 2008. U.S. assistance also played a decisive role in the passage of two regulations in FY 2007 that put the TB system under the control of the Sanitary-Epidemiologic Service, introduced revised reporting forms, and established MOH guidelines for management of multi-drug resistant TB.

The USG also supported the GOK’s decision to decentralize drug procurement by providing TB drug management logistics training to local health officials. The USG funded research to study the level of DOTS (World Health Organization’s Directly Observed Therapy Short Course methodology) integration in undergraduate medical education and provided a list of recommendations to improve practical skills at the undergraduate level.

The USG installed and subsequently expanded a computer-based TB surveillance and case management system (TB-ESCM) providing decision-makers with data to make informed decisions on TB policy. The USG expanded the diagnostic capacity of the MOH by providing quality assurance training to laboratory staff, and procuring 14 computers for pilot TB-ESCM sites in the Almaty region.

The USG and Kazakhstan leveraged TB funding by drafting a successful application to the Global Fund to fight AIDS, TB and Malaria, and the Global Drug Facility; upon approval, a three-year supply of pediatric TB medicine was provided.

Health Financing and Public Health Management - The objective of these programs was to improve health outcomes for major causes of morbidity and mortality.During FY 2007 the USG made significant progress with the GOK to improve health management systems for primary health care and public health management. Thanks to USG work in previous years, Kazakhstan’s regulatory framework supports a health financing system based on pooling of funds at the regional level, which increases equity and efficiency. While the GOK has committed to this system, periodic political shifts necessitate continued policy work. In FY 2007 the USG engaged in dialogue to preserve the pooling, developed a draft law to consolidate the health financing system, and worked with the World Bank to design a large scale project that will execute national health financing reforms (based largely on USG pilot programs from the last 10 years). The USG supported national implementation of the single-payer system by conducting regional seminars, refining the case-based hospital payment system, introducing a per-capita payment system for primary health care with a performance-based element, and improving health information systems.

The USG also promoted evidence-based medicine, new clinical practice guidelines, and general principals of family medicine through the Kazakhstan Association of Family Practitioners (KAFP), disseminated information on rational drug use, and supported an outpatient drug benefit through the Drug Information Center. The USG supported new arterial hypertension clinical practice guidelines by linking instruction from the Republican Cardiology Institute with a quality-improvement process supported by KAFP. These guidlines were initially introduced in six pilot sites; they now are scaled up to cover three additional regions. The USG trained five epidemiologists, and funded graduates to investigate five outbreaks of infectious diseases, including the outbreak of pediatric HIV in Shymkent.

As a result of USG assistance, 26% of Kazakhstan’s population is now covered by USG-supported health financing systems, exceeding prior year targets. In addition, 63% of primary health-care providers and 56% of hospital staff are paid under these financing systems. USG assistance also had a direct impact on improving a composite measure of health system effectiveness, which rose from 28% in FY 2006 to 45% in FY 2007. This index included indicators for effective screening of hypertension, provider diagnostic practices, patient education, and overall control of high blood pressure. In addition, the MOH demonstrated its confidence in USG trained epidemiologists by immediately acting on their recommendations following the HIV outbreak in Shymkent.

Maternal and Child Health - The objective of these programs was to work with the GOK to improve the quality of priority maternal and child health services in Kazakhstan. In FY 2007 the USG contributed to increased MOH and National Maternal and Child Center support for safe motherhood activities. The GOK implemented safe motherhood activities in the ten initial pilot facilities and expanded activities to six new institutions to include four of Kazakhstan’s 16 regions and its two major cities, Almaty and Astana. A USG Global Development Alliance with Exxon Mobil includes support for safe motherhood activities in Astana. The percentage of expectant mothers attending antenatal classes in select pilot sites increased from less than 2% in FY 2006 to 21% in FY 2007. The percentage of women giving birth with a partner in pilot sites increased from 9% in FY 2006 to 27% in FY 2007. In addition, USG programs increased active management of labor which decreased incidence of post-partum hemorrhage and blood transfusions, and reduced the unnecessary use of medication, which resulted in improved newborn Apgar scores.

A joint program between Kazakh medical training institutes and the USG-funded Kazakhstan Association of Family Physicians provided continuing medical education for 750 primary health-care workers, and trained 344 medical residents. The USG also supported Kazakhstan’s transition to World Health Organization Live Birth Definition standards by training 57 International Live Birth Definition trainers from 14 regions how to train other medical practitioners in their home regions to use the new live birth criteria. In January 2008 the GOK will adopt the new definition nationwide.

Family Planning and Reproductive Health - USG assistance objectives in this area in FY 2007 included an expansion of access to high quality family planning and reproductive health services, a reduction of unintended pregnancies, increased prevalence of healthy reproductive behaviors, a reduction of abortion rates and maternal and child mortality and morbidity.

To increase quality family planning services for women the USG, in a Global Development Alliance with Organon Pharmaceutical Company, introduced and strengthened post-partum and post-abortion family planning services in 18 maternity wards, 19 post-abortion wards, and 15 primary health care sites in the cities of Astana and Almaty, and the Karaganda region. The USG also conducted health education and community outreach on family planning and safe motherhood in the same locations. The USG supported the “Red Apple” hotline to disseminate reproductive health information nationally. The percentage of women in project sites adopting modern methods of family planning after having an abortion increased from 33% in FY 2006 to 71% in FY 2007. In addition, the GOK demonstrated its commitment to reproductive health rights by passing two laws supporting citizens’ rights to reproductive health services. However, little substantive support is provided by the MOH to enable health districts to procure contraceptives or provide family planning services.

ECONOMIC GROWTH

Kazakhstan continued to experience strong economic performance in 2007, with first half GDP growth of 10.2%. Inflationary pressures intensified, with consumer price inflation from January to October 2007 at 13.4%, compared to 6.6% for the same period in 2006. The challenges for containing inflation and managing exchange rates to check possible over-reliance on oil revenues became more serious for the GOK as oil prices remained high, the dollar weakened, and global credit market turmoil limited liquidity for the country’s banks. Commercial bank lending grew rapidly and though market turbulence slowed growth, the overall results of the banking sector’s response to problems at year’s end emphasized strengths rather than weaknesses.

USG assistance activities complemented Kazakhstan’s economic growth by building capacity at the National Bank for monetary policy and inflation management and for accounting methodologies for complex financial instruments. The U.S. also supported the Financial Services Agency to strengthen its capacity to supervise banking risks through consolidated supervision and prudential normatives for banking conglomerates.

FY 2007 was the first year of implementation under the landmark United States – Kazakhstan Program for Economic Development. Under the 2006 agreement, the GOK agreed to fund an increasing share of USG implemented economic growth programs culminating in FY 2009 when the U.S. and Kazakh shares will be equal at $5 million for each side. In early FY 2007 the GOK and USG developed the first joint program plan and began implementation under the plan late in the fiscal year. This arrangement serves as a helpful co-financing model which can be replicated in appropriate situations throughout the region.

Macroeconomic Foundation for Growth - The objectives of USG assistance in this area were to work with the GOK to promote sound economic policies and to strengthen the capacity of national financial institutions to promote broad-based growth. USG support helped the GOK develop and use performance indicators, including those based on international best practice in the areas of health, education and housing. The USG also played a key role in persuading the Ministry of Finance to adopt public sector accounting standards, including the Strategy and Action Plan for the adoption of cash-standards, (a key step in transition to IPSAS-accrual accounting and reporting). The GOK also adopted a formula-based inter-governmental transfer methodology modeled on international best practices in the management of state assets, including privatization, dividend policy, and performance evaluation.

USG technical assistance to the newly established Competition Protection Committee helped it use international best practices in competition law, analysis, enforcement, agency organization and independence. USG assistance strengthened the public audit capacity at the Accounts Committee, financial audits, performance audits, fraud detection and prevention.

Trade and Investment Promotion - The USG’s objective for these activities was to increase Kazakhstan's economic competitiveness by improving conditions for foreign investment and cross-border trade and transit. The USG started assisting the GOK in August 2007 to enhance the country’s competitiveness by improving conditions for cross-border trade and transit, and to support the GOK’s efforts to accede to the World Trade Organization (WTO). Activities began in a number of areas, including reducing barriers to trade, facilitating transport, transit, and custom clearance, and establishing border crossing points consistent with international standards. By the end of FY 2007 the USG had provided the GOK with nine technical reports regarding WTO accession issues.

In FY 2007 the USG brought 17 individuals from the following fields to the United States for professional training: health care administration; business franchising; hotel management; mining; airport development; road construction; food processing and packaging; and oil pipeline management. Participants in previous commercial exchanges continued to use their training in FY 2007. One alumnus was appointed vice president of the Innovative Social Technologies Center, overseeing the construction of 100 rural hospitals. He planned to integrate medical technologies and energy efficient construction practices he had learned about during his 2004 Hospital Administration program. A second alumna credits her participation in the FY 2005 USG-sponsored insurance training for her promotion in FY 2007 to the position of Director for the Social Insurance Department of the Kazakhstan Ministry of Labor. A third alumna, head of the Karaganda Oblast Association of Entrepreneurs, conducted a survey of the business climate in the Karaganda Oblast to determine which districts are most in need of government support to small business, and then prepared a proposal for a small business development program to be funded by the GOK. She also developed standardized training courses in small business, human resource management, general management and marketing, training over 1,500 employees of regional businesses in 2005 and 2006.

The USG also supported Kazakhstan’s artisan initiative in partnership with Chevron to improve productivity of artisan groups in rural communities and give them access to domestic and international markets. Additionally, Philip O’Reilly, a British artist and an expert in felt design led a three-day design seminar for artists in spring 2007. Twenty professional artisans from rural districts of Almaty and southern oblasts had an opportunity to apply new tools and techniques, and to generate new design ideas.

Financial Sector Programs - The objective of these programs was to improve corporate governance by inculcating international standards of financial accounting and auditing into the Kazakh business environment. Financial sector reform is fundamental to the creation of a modern market economy. The banking sector in Kazakhstan has developed rapidly, strengthening financial sector growth and extending throughout the Central Asian region. However, corporate governance remains weak. Modern accounting practices improved the investment climate, strengthened corporate governance, and overall economic growth. The USG helped the National Bank of Kazakhstan to improve its monetary policy and inflation modelling skills, and provided training on accounting methodologies for complex financial instruments to 20 key bank officials. Training topics included complex financial instrument courses covering an overview of International Accounting Standards iteration 39 (IAS 39), accounting for plain vanilla bonds, securitization, accounting for mortgage-based securities, and accounting for derivatives and hedging under IAS 39. In addition, the USG strengthened the the Financial Services Agency’s knowledge of banking risks, consolidated supervision, and prudential normatives for banking conglomerates.

In FY 2007 the USG continued to strengthen private sector accounting through the Russian-language Certified Accounting Practitioner (CAP) and Certified International Professional Accountant (CIPA) program. An impressive 3,798 accountants in Kazakhstan have qualified for the internationally recognized CAP/CIPA certification since the program’s inception, including 993 in 2007. These certified accountants promote transparency and accountability by using consistent and reliable accounting practices. The program missed its FY 2007 targets for the number of participants entering the program by 7%, largely because the GOK increased the fee to take the CIPA exam by 33% to over $100 per exam. In addition, there was confusion in the Ministry of Finance over the recognition of CIPA certifications.

Modern Energy Services - The objective of the USG’s energy services program was to restructure Kazakhstan's electricity market and to integrate it within a transparent, efficient and open Central Asian electricity market. During FY 2007 the USG organized a Regional Market Design workshop in Almaty during which Kazakhstan’s senior energy officials reviewed international electricity market models to define favorable models for the proposed Central Asian electricity market. Kazakh regulators also participated in energy regulation and investment conferences in Istanbul and in Almaty. A July 2007 study tour to the U.S. electricity market operator PJM provided public and private sector participants with an opportunity to learn about the operations of a progressive electric power energy market. The USG also advised the GOK on developing a regional Power System Planning Model compliant with transmission companies in other Central Asian countries. Participating countries began installing USG-provided Power System Planning Modeling software.

The USG organized a trip for Kazakhstanian specialists to visit Tajikistan and the Kyrgyz Republic to outline how the trading system works in Kazakhstan. As a result of the trip, a memorandum of understanding was signed between Kazakhstan and the national energy companies of the Kyrgyz Republic and Tajikistan. The USG funded training for Kyrgyz and Tajik energy regulators at the Kazakhstan Market Operator on Electricity and Capacity, and helped energy regulators identify and eliminate legal, administrative and institutional constraints to cross-border electricity trade.

Also in FY 2007 the U.S. and AES Corporation jointly sponsored the creation of an Environmental Management and Engineering Masters of Science degree program at the Eurasia National University in Astana. Nine students graduated from the program in July 2007 and ten more will complete the program by July 2008. One negative development in FY 2007 was the termination of a $15 million Development Credit Authority Agreement due to legal disagreements with Kazkommertsbank.

Agriculture - Despite Central Asia’s historical role in providing agricultural products to Russia and other former Soviet republics, traders now struggle to move goods across borders and are unable to access international trade networks. Many policies affect producers’ ability to meet market demands, including regulations related to land tenure, crop quotas, business registration, taxes, access to credit, and customs. In addition, policies often discourage transparent transactions, making the region one of the most difficult in which to do business.

The objectives of USG agricultural assistance programs include supporting the GOK to improve its agricultural policies and institution, increase agricultural output and trade, and improve the nation’s agricultural knowledge base.

The USG began a new agricultural marketing program in Kazakhstan in August 2007 to access the booming local market and facilitate transit to other expanding markets, particularly Russia. The program will build upon prior USG assistance in agriculture. It will use existing public and private sector relationships to increase awareness of agricultural issues and instruct farmers and other stakeholders about how to advocate effectively for policy improvements.

In order to improve agricultural productivity, the USG established the Sustainable Dairy Global Development Alliance to assist small and medium-sized dairy farms in Kazakhstan. Dairy products are a large part of the typical regional diet and demand for them in Central Asia is strong. Dairy productivity for small and recently privatized farms has stagnated at extremely low levels. To improve dairy productivity and livelihoods in rural areas, the USG supplied appropriate new technology and equipment through local small businesses, provided natural resource management and environmental quality training, and fostered competitive dairy markets. The USG lost time putting a working and profitable demonstration site into operation because of the loss of the originally contracted partner farm and problems with customs clearance of imported fencing. The demonstration farm should be operational in FY 2008. USG activities at pilot partner farms throughout Kazakhstan included the development of grazing, profitability and productivity plans, building renovation, and technical training.

In FY 2007 the USG sent one university agricultural economics instructor to the United States to update his technical knowledge and teaching methods. After his training, he revised four of his existing courses and developed four new short courses, both of which he taught in FY 2007. He also began to work as a consultant to the agri-business sector. Additionally, two USG program alumni from 1995 were promoted to department directors in their universities.

To promote economic diversification and to support the newly established national agricultural holding company, the USG sponsored an expert in industrial-scale agricultural development and agricultural trade. The speaker consulted with GOK representatives on a number of agricultural issues including: grain production and export, mass food production, bio-diesel fuel from grain, partnerships in leasing or trade in industrial farm machinery, state-of-the-art livestock breeding, industrial food preparation, and dairy management.

Business Enabling Environment - USG objectives in FY 2007 for programs in this area include enhancing the competitiveness of the private sector and working with the GOK to improve the laws, regulations, and administrative practices that govern the private sector’s role in the economy. USG support for improving Kazakhstan’s business environment fits within the framework of the Program for Economic Development and is co-financed by the GOK. This close USG-GOK coordination has facilitated quick progress on Expert Council activities, tax process work, and the opening of government service “Public Access Centers.”

To improve dialogue between the GOK and the private sector, the USG trained participants from 14 municipalities on how to simplify administrative and regulatory requirements, exceeding the target by four cities. This effective dialogue improved implementation of business-related legal reforms and streamlined the administration of small and medium enterprises (SMEs). For example, USG assistance played a direct role in the adoption of the law “On Procurement,” which increased overall transparency and reduced fees on government bids from 3% to 1%, saving businesses over $110 million annually. The USG also supported the adoption of the law “On Licensing,” which eliminated the requirement for 370 unecessary licenses and is expected to save businesses over $9 million annually. The USG recommended improvements to the law governing the succesfull public-private Expert Councils that have already been incorporated by the West Kazakhstan Provincial Government and will be considered by Parliament at the beginning of FY 2008.

The USG also funded an expert on corporate social responsibility who met with government leaders, business executives, and students. She provided a major telecom company, and several other new corporate foundations, with guidance on how to create foundations that follow principles of corporate social responsibility.

Private Sector Productivity - The development of the SME business sector, defined in Kazakhstan as businesses with fewer than 250 employees, is a key element in the transition to a competitive market economy. The objective of USG private sector development in FY 2007 was to promote the growth of entrepreneurship and SME competitiveness in Kazakhstan and increase domestic and international sales for SMEs.

In FY 2007, USG assistance developed a set of comprehensive SME courses and a practical tool-kit including SME performance indicators. The courses consist of strategic planning, financial management, marketing, and other business management disciplines. In addition, the USG developed a SME consultant certification program that created a cadre of competent and credible consultants. Sixty professionals completed the first set of courses in FY 2007 and 20 began study for the second level of training. High-level GOK officials took part in two study tours and worked with counterpart agencies to implement international best practices for SME development.

Workforce Development - The objective of this program is to enable youth to take advantage of viable business opportunities, or find meaningful, well paying jobs. The USG broadened the skillsets of Kazakhstan’s youth by introducing economics and basic finance into secondary school curricula, and by giving youth opportunities to start and manage their own businesses. The USG collaborated with the Ministry of Education (MOE) to publish economics education materials in the Kazakh and Russian languages, and develop new educational techniques like electronic simulation exercises, interactive video guides, and online textbooks, which have been integrated into GOK standards for economic education at secondary schools. In FY 2007 more than 2,200 students were exposed to market economics and 1,024 teachers were trained to implement economics programs at 3,881 schools. In addition, 9,000 textbooks were published and electronic teaching guides and economics textbooks were launched. The USG, the MOE, and local businesses jointly sponsored the second annual National Student Economics Tournament. Over 25,000 students took part in the first round of the competition and the winners received university scholarships in business or economics.

Inclusive Financial Markets - The objectives of these programs were to expand access to financial services and improve the legal environment for microfinance. To expand access to financial services in Kazakhstan, the USG continued to support the microfinance sector. A key focus was providing advice to develop the capacity and sustainability of the Association of Microfinance Organizations of Kazakhstan on financial viability, human resource development, external relations, and service delivery to members. As a result of this assistance, the Association adopted improved governance practices, enhanced its lobbying capacity, and offered training opportunities for members and non-members on business plan structure, business strategies, marketing, operational and financial planning, delinquency management, and sustainable interest rate setting.

The Association improved the existing legal environment for microfinance by successfully lobbying for amendments to the Law on Microcredit Organizations. The new law increased the maximum loan size and expanded the definition of a microfinance borrower. Additionally, the Association was included in the Ministry of Industry and Trade’s Microfinance Legislation Working Group. The Association’s participation in the working group resulted in recomendations being sent to the States Statistics Agency regarding the required reporting format for microcredit organizations.

The Association conducted extensive negotiations with financial institutions, such as Bank Turan Alem, SocieteGeneral, SAFC, Resmi-Group, and Symbiotics, to assist Association members in attracting funding. As a result of these activities the total number of Association members increased from 45 to 58. The aggregate loan portfolio of AMFOK’s members grew from $60 million in FY 2006 to $102 million in FY 2007. The Association also secured financial support from other donors including the World Bank, a significant step towards sustainability.

The USG and EBRD assisted the commercial Alliance Bank to increase its SME portfolio. The downscaling program was completed in May 2007, resulting in an increase in Alliance Bank’s outstanding SME portfolio from $11 million and 1,309 loans at the beginning of the year to $24 million and 2,500 loans in May. Alliance Bank management committed to further increase their SME lending activities.

FY 2007 Measures of Country Performance

The following data are based on the Monitoring Country Progress in Europe and Eurasia system developed by the United States Agency for International Development (USAID) to measure and track progress in the region. The system uses four different indices to monitor progress, drawing on readily available standardized country-level data on economic reform, economic structure and performance, democratic reform, and human capital. The primary data sources are the European Bank for Reconstruction and Development (EBRD), the World Bank, the United Nations Children’s Fund (UNICEF), and Freedom House. The data for each of the four indices are converted and standardized to a 1-to-5 scale, with a “5” representing the best performance of the Eastern Europe and Eurasia region, and a “1 the least advancement of the region.

Kazakhstan’s Democratic Reform* Scores in 2006 compared to Romania and Bulgaria in 2002

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans democratic reform scores in 2006* (the grey shaded area) as compared to the average of Romanias and Bulgarias democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Kazakhstan’s democratic reform scores in 2006* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2007 scores not yet available

Kazakhstan’s Democratic Reform Scores in 2006 compared to its Reform Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans democratic reform scores in 2006* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Kazakhstan’s democratic reform scores in 2006* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Actual 2007 scores not yet available

*Democratic reforms include the electoral process (the extent to which elections are free, fair and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform) and the scope of corruption as well as anti-corruption income.

Kazakhstan’s 1st Stage Economic Reform* 2007 Scores Compared to Bulgaria and Romania in 2002

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans stage one economic reform scores in 2007* (the grey shaded area) as compared to the average of Romanias and Bulgarias economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Kazakhstan’s stage one economic reform scores in 2007* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

Kazakhstan’s 1st Stage Economic Reform 2007 Scores Compared to its Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans stage one economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Kazakhstan’s stage one economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).


Kazakhstan’s 2nd Stage Economic Reform 2007 Scores Compared to Bulgaria and Romania in 2002

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans stage two economic reform scores in 2007* (the grey shaded area) as compared to the average of Romanias and Bulgarias economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Kazakhstan’s stage two economic reform scores in 2007* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

Kazakhstan’s 2nd Stage Economic Reform 2007 Scores Compared to its Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Kazakhstans stage two economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Kazakhstan’s stage two economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).


*Economic reforms include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and “second stage” reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

Kazakhstan’s Progress on the USAID Country Progress Indices between 1998 and 2007

Date: 01/01/2008 Description: Kazakhstans Progress on the USAID Country Progress Indices between 1998 and 2007. State Dept Photo

(1) Economic reforms index include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and second stage reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

(2) The economic structure and performance index tracks indicators such as the size of the private sector as % of GDP, export share of GDP, and the size of the small and medium enterprise sector as % of GDP, economic growth, inflation, debt, and foreign direct investment.

(3) The Democratic reforms index include the electoral process (the extent to which elections are free, fair, and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform), and the scope of corruption as well as anti-corruption efforts.

(4) USAID tracks progress on the Human capital index by analyzing trends in health (life expectancy, under five mortality rates, and public expenditures on health), education (secondary school enrollment rates and public expenditures on education) and per capita income.



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